Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2015 (10) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (10) TMI 2016 - AT - Income TaxExpenditure set off against interest income - whether the receipt of interest on borrowed funds put in FDRs with the bank was capital receipt or revenue receipt? - Held that:- In the instant case, the assessee has raised loans and borrowed funds from different persons to set up shopping malls, multiplexes and associated activities related thereto. In between construction period, funds were parked with the bank in fixed deposits and/or in mutual funds. The assessee earned on fixed deposits and earned gains in respect of investment in mutual funds. In addition to interest, the assessee has sold scrap which was the alleged result of the construction raised. The Assessing Officer while framing the assessment has taxed interest from FDRs, sale of wastage and mutual funds as income from other sources. It has not been brought on record that the surplus funds were put in FDRs on account of commercial expediency. Since the funds were not required at the relevant point of time in construction activities, the same were parked with bank to earn interest. Therefore, the interest earned on surplus funds parked with bank and in mutual funds are not inextricably linked with the construction of shopping malls, multiplex and other associate activities, etc. Therefore, the aforesaid interest earned on mutual funds by the assessee cannot be capitalized and have been rightly treated by the Revenue as income from other sources. We accordingly set aside the order of the ld. CIT(A) and restore that of the Assessing Officer. - Decided in favour of revenue. Sale of wastages - revenue v/s capital receipt - Held that:- It is not clear from the orders of the lower authorities whether sale of wastage was at all generated during the construction activities or connected or inextricably linked with the construction of shopping mall and multiplexes. If it is sale of waste materials generated during the course of construction activities, it would reduce the cost of project; otherwise it would also be revenue receipt. With these directions, we restore the matter to the file of the Assessing Officer to verify the nature of sale of wastage material. We accordingly set aside the order of the ld. CIT(A) in this regard and restore the matter to the Assessing Officer to examine the nature of sale of waste material in terms indicated above and treat it accordingly. - Decided in favour of revenue for statistical purposes.
|